The uproar about Pandora Papers has misled millions of people into believing those whose names are found in the papers must be corrupt, disloyal and marked for perdition. This belief could have stemmed from the genealogy of the Greek mythology “Pandora” which means “sealed jar of world’s evil”. Pandora Papers are product of International Consortium of Investigative Journalists (ICIJ) of over 600 journalist from 117 countries. The papers comprise about 12 million leaked records of 14 firms in tax havens. While some of the offshore investors may be criminals with looted wealth of their people, others are legitimate businessmen and women who are trying to escape from the greedy taxation system of various governments and unrealistic corporate structure.
Tax haven or shelter is a legitimate way by which the affluent legally minimize their taxes and hide their wealth in a jurisdiction where the corporate system is concealed in obscurity and secrecy. Tax havens are regarded as offshore world but in reality, these are jurisdictions situated in known places, not fairy land. Some of the tax shelter paradise are Panama, Switzerland, Monaco, Dubai, Cayman Islands, British Virgin Islands, Bermuda, South Dakota and Delaware. These tax havens have attracted “creme de la creme” of the business world to boost their economy and have used the mechanism to metamorphose from a fragile economy to a financial stronghold in the corporate world.
WHY DO TAX HAVENS EXIST
Most jurisdictions that operate a tax shelter system are places that could have been plagued by extreme poverty due to lack of economic prospects and mineral resources. The fear of being driven to the abyss of poverty induced the leadership of the places to forge a corporate structure with minimal regulation and high level of confidentiality that will attract the business mogul of the world to invest their wealth in a place with unusual favorable taxation system and investment stability with guarantee of secrecy.
COMMON REASONS WHY THE RICH HIDE THEIR WEALTH IN OFFSHORE WORLD
- The legal system of the offshore world allows the rich to legally avoid paying some kind of taxes on their assets. Some of the taxes the offshore world get rid of are income tax, corporate tax, capital gain tax, wealth tax and some fiscal laws and regulations.
- It has served as the best way for the rich and powerful to keep their wealth away from their creditors. Due to the highly confidential nature of the corporate administration by the government of the offshore world, it is difficult to levy execution on the assets of the rich who have hidden their wealth in obscurity through the system that makes it difficult or even impossible to identify the owners of the properties.
- High level confidentiality is the hallmark of offshore corporation. Ownership of assets can be cloaked by anonymous companies. The companies are not bound to identify their owners in majority of the cases.
- There is minimal corporate regulation. Aside from very few industries such as banking, insurance and investment funds, most commercial activities do not require regulatory approval to operate a business entity.
- The offshore world usually establish a commercial court that delivers well considered judgment consistent with commercial good sense and maintains swift access to justice. This reduces expensive arbitration and unreasonable decision.
- In totality, operating a business in the offshore world is easy due to corporate flexibility.
IS IT LEGAL TO INVEST IN OFFSHORE WORLD
Yes, it is legal because the laws of the jurisdictions validate the investment. Due to the principle of sovereign autonomy, the laws legitimizing the act cannot be questioned. However, the offshore world has been used as a brood of criminals for stashing ill-gotten wealth. The critics of offshore world largely rely on moral standard to judge offshore activities. It is pathetic that what is moral to one person is immoral to another.
WHO ARE THE PROMOTERS OF OFFSHORE WORLD INVESTMENT
The same rich and powerful who made draconian laws in their home countries demanding exorbitant taxes from their people are the same chameleon who hide under the cloak of anonymity to conceal their wealth in offshore world. These are political leaders, monarchs, public critics, clergy, celebrities and many more who promote and legislate laws they cannot abide by in their home countries but take shelter in the underworld to satisfy their temptation.
List of Offshore World (Tax Havens)
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